Campaign finance fraud accusations haunt Spano, congressional office

MIAMI — U.S. Rep.-elect Ross Spano is struggling to hire office staff as he relies on a controversial adviser: one of the friends at the center of a campaign finance scandal that is rocking the Florida Republican.

Spano, an attorney and outgoing state legislator with past financial troubles, recently admitted in a letter to the Federal Election Commission that he might have committed a campaign finance “violation” in failing for two months to disclose $180,000 he accepted from two friends. Spano, who personally loaned his campaign $174,500, says the funds he received were loans.

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But if the FEC deems the “loans” to be campaign contributions, they would exceed legal donation limits of $2,700 per cycle, per contributor. And experts say it could constitute a criminal violation by Spano and, potentially, the two people who gave his campaign the money — Cary Carreno and Karen Hunt.

Of the two donors, Carreno loaned the most — $110,000 — and has the closest relationship with Spano. Carreno has been a friend of Spano since sixth grade, a onetime legal client of Spano’s, a longtime Spano contributor and a donor to a super PAC helping Spano. Since the election, Carreno has acted as a sort of employment agent for the congressman-elect; he told the campaign’s treasurer she was fired, and is now helping interview prospective job hires, even as opponents from both sides of the aisle have called for a criminal investigation of Spano.

“Cary is one of Ross’s oldest friends, and Ross often asks for his opinion or for him to weigh in on various matters,” said Spano spokesperson Sandi Poreda. “He has not been involved in any official capacity in the DC hiring process, and there are no current plans to bring him on as a staff member.”

But Carreno’s unofficial involvement with staff hires is “really weird,” according to one congressional job applicant in Washington who told POLITICO that one of Spano’s campaign staffers was helping coordinate interviews between Carreno and potential employees. The applicant did not want to be named for fear of reprisal. Carreno could not be reached and did not return a message seeking comment. Hunt couldn’t be reached, either.

A congressional staffer from another office said Carreno’s involvement in Spano’s hiring practices is a “red flag” and has become the subject of gossip among House staff in Washington that's making the Republican a less-than-desirable boss.

“There’s word you don’t want to work for Spano because it’s trouble,” the congressional staffer, who is not authorized to speak to reporters, told POLITICO confidentially. “But some people are desperate.”

Poreda said Spano “doesn’t have any staffing decisions to announce yet.”

The Spano scandal is the second potentially criminal issue nagging a Republican congressional campaign. News of Spano’s controversy in Florida’s 15th Congressional District, however, has been overshadowed by the reports of voter fraud that aided Republican Mark Harris in North Carolina’s 9th District, a race in which that state’s officials have refused to certify a winner in the election.

Florida officials certified the results of Spano’s race and declared him the winner soon after Election Day Nov. 6, making it highly unlikely that House officials will heed the calls of Spano’s critics by refusing to seat him. A 1969 U.S. Supreme Court ruling prohibits congressional leaders from blocking a Congress member-elect from taking office if he or she has been duly elected and meets the constitutional requirements to serve.

Still, Spano’s troubles are likely to intensify in the coming months. Two of Spano’s opponents, former Republican state Rep. Neil Combee and Democrat Kristen Carlson, have called on the FBI to investigate because, they say, he willfully and knowingly broke campaign finance law by acting as a straw donor for his own campaign. A bipartisan chorus of critics also say the House Ethics and Elections Committee needs to examine the case once Spano is seated.

Poreda said Spano did not intentionally break any laws and that prior failures to disclose were the result of errors by an unnamed campaign staffer.

Spano was supposed to file his financial disclosures with the U.S. House in May, but he asked for an extension. The following month, Spano received the first of his four “loans” from the two donors, a $35,000 check from Carreno. Two days later, Spano made a “personal” loan to his campaign of $27,500.

Fewer than three weeks later, Spano was supposed to file his disclosure, on July 17, but he failed to. He then proceeded to collect the other “loans” from Carreno and Hunt without publicly disclosing anything for months.

Only on Nov. 3 — three days before Election Day — did Spano finally file his House disclosure and admit he received outside money, a total of $180,000. And that only happened after his hometown newspaper, the Tampa Bay Times, hounded him over it. At the time, Spano’s campaign manager called the disclosure controversy a “non issue.”

But at the end of the month, on Nov. 30, an attorney representing Spano, Carreno and Hunt sent a letter to the FEC and admitted that “some of the proceeds from the personal loans made to Representative-Elect Spano and the personal loans he made to the Committee may have been in violation of the Federal Campaign Finance Act.”

Under campaign finance law, a candidate can take a loan and use the money for a campaign. But the practice is highly regulated to make sure the money isn’t being given to circumvent campaign contribution limits. Also, most candidates borrow from financial institutions, not friends.

Poreda couldn’t explain why Spano — who has previously faced foreclosure and had two other banks haul him into court over unpaid debts — did not get a bank to loan him the $180,000. His state financial disclosure report filed in July showed he had a total of only $6,890.65 in two bank accounts and $18,445.23 in a state retirement account to begin the year.

Poreda said Spano plans to settle his loan debt with proceeds from the sale of his law firm, which he valued at a maximum of $500,000 in his federal financial disclosure form. In his July state disclosure, Spano valued the firm at $375,000 and his income from it at roughly $92,500. Spano also listed college loans exceeding $106,000 — an increase of about $4,000 since he filed his first financial disclosure for 2012.

Under the terms of the promissory notes Spano said he signed with Hunt and Carreno, the congressman in January will start being charged 5 percent interest annually and is supposed to begin paying back each of the four loans in monthly installments of $1,000. All told, that would be $4,000 from a congressional paycheck of about $10,000.

Brett G. Kappel, an election law attorney who has been tracking the case, argues that there’s a reason Spano, Carreno and Hunt are all being represented by the same attorney. “He — and the two contributors — have serious criminal exposure,” Kappel said.

Kappel said the FEC may take issue with attorney Elliot S. Berke’s claim in the letter that the late disclosure and potential admission of guilt were made “sua sponte,” or of their own accord, as if they were proactively trying to solve a problem.

“The FEC would take into the consideration that the candidate was a lawyer himself, that he had run for elected office in Florida before and that he failed to file his personal financial disclosure report until three days before the election,” Kappel said.

Under federal law, a congressional campaign is not supposed to coordinate with outside super PACs supporting it. Yet on June 29, a day after Carreno made his first “loan” to Spano, Carreno's weatherization company, Alternative Energy Applications, made the first of two donations totaling $11,000 to a Spano-backing super PAC called CIVIC. Then, Carreno personally told Spano’s campaign treasurer, Jamie C. Jodoin, that she was fired; the campaign treasurer told the Tampa Bay Times that she was never told of the alleged loans.

“I don’t see how the firing of a treasurer of the campaign by a contributor is legal unless the contributor is also an agent of the campaign. But if he’s an agent of the campaign, that raises coordination issues,” Kappel said.

The campaign’s financial peculiarities and Spano’s penchant for blaming staff for his errors is part of a pattern, said Conor Hurley, the campaign manager for Spano’s opponent, Carlson. He said Spano has a history of not taking responsibility for his errors, including the time in 2017 when his Twitter account used the “like” feature bookmarking a lesbian sex scene titled “Expert oral sex 17” from the “Goddess Lesbian” porn account. Two days before that, Orlando Weekly reported, Spano filed Florida House legislation to declare pornography a public health crisis.

“It’s bizarre to me that he’s gotten in trouble three times and each time he says someone else is at fault,” Hurley said. “Spano got caught liking porn from his Twitter account. So he blamed staff. Fail to file financial disclosures on time? He blames staff. Get illegal loans and misreport them? He blames his treasurer. And he gets his donor to fire her.”

Carreno’s relationship with Spano is not just personal and political; it’s professional as well. In 2012, one of Carreno’s companies listed Spano as a registered agent when it purchased the land where Alternative Energy Applications now sits. In that year, Spano was running for office for the first time, a state House seat, and Carreno was a contributor.

Just before filing to run for office, Spano had completed a short sale on his home stemming from a Bank of America foreclosure filing against him in 2010, months before he cut a YouTube video advertising his services as a foreclosure attorney. During that period, Spano was also battling Chase bank over $5,754.23 in debts and Citibank for another $9,811.56, court records show.

Yet despite the financial trouble, Spano, as he did in this last campaign, was able to come up with a sizable chunk of money he listed as a loan to his campaign: $51,000. Spano and his wife contributed another $1,500.

“The $52,000 was money he and his wife saved from distributions taken from the business over the previous year or so,” said Poreda, Spano’s spokesperson.

The loan in 2012 was never paid back to Spano, Poreda confirmed, even though Spano had just recovered from financial problems, and though his subsequent state financial disclosures showed he could have used the money because his law firm had lost value and his income from it decreased after he took office as a state legislator.

Spano’s 2018 congressional campaign is in debt as well. Including the $174,500 listed as loans from Spano, the campaign lists $302,134.75 in debts and obligations owed in its last campaign report filed last week. The campaign reported its total net expenditures were $786,130.50.

The Florida House member who served with Spano and ran against him for Congress, Neil Combee, said he sees a parallel between Spano’s prior financial troubles and his current predicament.

“He’s an imposter, a fake, phony as a plastic banana,” Combee said. “Ross knew exactly what he was doing this time. He was broke and he was desperate and he did what desperate people do: He broke the law.”